Theresa May’s cabinet are thrashing out plans to ramp up preparations for a “no-deal” Brexit after she avoided a vote of no-confidence.
Sky News understands senior ministers have gathered in Downing Street to decide how to get the UK ready to leave the EU without a divorce agreement.
That could include a new appeal to businesses.
Mrs May was given a fresh boost of support by backbench Brexiteer Jacob Rees-Mogg, who vowed to “move on” from losing a bid to unseat her.
But Labour is still threatening to call a vote of no-confidence in the government, which could force a general election if successful.
The prime minister looks set to avoid any major showdowns over Brexit in parliament, with MPs breaking up for the Christmas holidays on Thursday.
But she could face a heated debate in cabinet over preparations for a no-deal Brexit.
Chancellor Philip Hammond will also announce to ministers £2bn of new funding to prepare for the scenario, The Sun reported.
It comes after Downing Street sources said a no-confidence motion by Labour leader Jeremy Corbyn in the PM personally would not be granted parliamentary time for a debate this year.
Mr Corbyn threatened to table the censure for Mrs May’s decision to pull a “meaningful vote” in parliament on her Brexit deal.
But in a display of unity, Conservative Brexiteers vowed to support the prime minister in such a test.
Jacob Rees-Mogg, who was one of 117 Tory who lost out in a bid to unseat her last week, said he respected the result and was now backing her.
“I lost the vote last week – and if you lose, that is ultimately conclusive,” he told Sky News.
“Events move on, they have moved on and I have therefore moved with them.”
Leader of the Commons Andrea Leadsom, speaking ahead of cabinet, promised ministers were preparing “for all eventualities”.
“We’re certainly not intending to have a no deal Brexit, but parliament does need to vote for a deal, otherwise the legal default position is we will head for no deal,” she said.
Despite Labour not being able to table its no-confidence motion in the prime minister, it will still push for one in the government in the new year.
John Healey, Labour’s shadow housing secretary, told Sky News it was a question of “when – not if” the push would come.